The key reasons for the rethink are ambiguity over the use of diesel in passenger vehicles in the wake of recent court orders and government moves, impending transition to BS VI emission rules and buyer preference that shifts away from diesel, they said.

Maruti Suzuki is evaluating the possibility to stop fitting its own 800cc diesel engine, which currently powers the Celerio, on its cars, three people who are associated with the nation's biggest car maker said.

Global leader Toyota Motor has already dropped plans to fit the 1.5 litre GDI diesel engine on upcoming Vios sedan in India. Japanese rival Honda Motor's India unit, a late entrant into the diesel segment, studied a 1.2 litre 3-cylinder diesel engine for a proposed small car, but has now shelved that idea. Homegrown diesel engine expert Tata Motors has also put its 1.2 litre and 1.6 litre diesel engines on hold.

A Maruti Suzuki spokesperson said as a policy the company does not comment on future product plans. Spokespeople for Toyota Kirloskar and Tata Motors too declined to comment on specific product plans. Honda Cars India didn't respond until press time on Sunday to an email seeking comment.These companies were on an overdrive until three years ago, investing huge money and time to expand their portfolio of diesel cars to satiate customer demand towards diesel-run vehicles.

But with the government scrapping subsidy on diesel, which reduced the fuel's price difference with petrol, consumer preference started shifting back to petrol. Recent moves to discourage the use of diesel in passenger vehicles have further eroded the demand for cars, especially small cars, powered by diesel.

"When the 800cc (diesel engine) was planned, the scenario was exactly opposite. Buyers were scurrying for every possible diesel engine option and as a small car expert, Maruti anticipated significant demand for future," said one of the people associated with Maruti Suzuki. "Today the demand dynamics have altered dramatically. It appears the 800cc may carry on in small way, but has no future in BS VI."

The Supreme Court has temporarily lifted a ban on the registration of large diesel passenger vehicles in the National Capital Region on condition that a special environment levy is paid, but has yet to come out with a final verdict. There have also been efforts, like from the National Green Tribunal and those fighting air pollution, to discourage the use of diesel.

These have taken a toll on sales. For instance, the share of diesel models in passenger vehicle sales has come down to 40-42% from the peak of 58% in fiscal 2012.

With the government deciding to advance the BS VI to 2020, the cost to upgrade the diesel engine to meet the guidelines will make diesel cars further expensive. The price gap with petrol could widen to more than Rs 2 lakh in small cars from Rs 1-1.5 lakh currently, thereby making it unviable.

Tata Motors spokesperson said the company recognises that the earlier change to BS VI will impact the future mix of power system solutions and this is under review as Tata Motors finalizes the product plans. Having invested strongly in the research and development for future emission reduction across the entire range of vehicles, the application to our vehicles is yet to be completed.

“The accelerated timelines for BS VI emissions is demanding a huge R&D effort over the next few years. This is a complex engineering task and our engineering teams have started working on critical programmes,” added Tata Motors spokesperson.

Experts see the demand for diesel power train in small vehicles to fall post introduction of BS VI rules, but expect it to remain strong in SUVs and bigger sedans. Also, diesel cars will be critical to meet proposed Corporate Average Fuel Economy (CAFE) rules, which seek to improve the average fuel economy, as diesel gives better mileage than petrol.

While there are efforts to offer alternatives like hybrid technology, N Raja, senior vice president of sales and marketing at Toyota Kirloskar, said diesel would remain an integral part of any manufacturer, especially in view of future regulations such as CAFE.

At Maruti, for instance, while the future of 800 cc diesel is being debated on, the company is going ahead with its 1.5 litre diesel engine development, said a person associated with Maruti.

Toyota, meanwhile, is betting on hybrid vehicles. It is planning to bring a hybrid Corolla Altis to India and is studying the possibility of a hybrid Vios sedan.

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In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.

In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.